It's guaranteed: Fire an icon and face furor

By David Kaplan

June 25, 2013

Photo: Vasna Wilson
WilsonManish Tandon, Freelance

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Portrait of Men's Wearhouse CEO George Zimmer, left, who is passing the reins to Douglas Ewert at the San Francisco's downtown store on Market St. Zimmer will continue to be the company's spokesperson. (Photog by Vasna Wilson/Freelance) less

Portrait of Men's Wearhouse CEO George Zimmer, left, who is passing the reins to Douglas Ewert at the San Francisco's downtown store on Market St. Zimmer will continue to be the company's spokesperson. ... more

Photo: Vasna Wilson
WilsonManish Tandon, Freelance

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Men's Wearhouse says George Zimmer has trouble giving up the reins.

Men's Wearhouse says George Zimmer has trouble giving up the reins.

Photo: Vasna Wilson WilsonManish Tandon, Freelance

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Portrait of Men's Wearhouse new CEO Douglas Ewert, left, and founder, chairman and former CEO George Zimmer at the San Francisco's downtown store on Market St. Zimmer who is passing the reins to Ewert will continue to be the company's spokesperson. (Photo by Vasna Wilson/Freelance) less

Portrait of Men's Wearhouse new CEO Douglas Ewert, left, and founder, chairman and former CEO George Zimmer at the San Francisco's downtown store on Market St. Zimmer who is passing the reins to Ewert will ... more

Photo: Vasna Wilson
WilsonManish Tandon, Freelance

Image 4 of 5

Portrait of Men's Wearhouse new CEO Douglas Ewert, left, and founder, chairman and former CEO George Zimmer at the San Francisco's downtown store on Market St. Zimmer who is passing the reins to Ewert will continue to be the company's spokesperson. (Photo by Vasna Wilson/Freelance) less

Portrait of Men's Wearhouse new CEO Douglas Ewert, left, and founder, chairman and former CEO George Zimmer at the San Francisco's downtown store on Market St. Zimmer who is passing the reins to Ewert will ... more

Photo: Vasna Wilson
WilsonManish Tandon, Freelance

Image 5 of 5

Portrait of Men's Wearhouse new CEO Douglas Ewert, left, and founder, chairman and former CEO George Zimmer at the San Francisco's downtown store on Market St. Zimmer who is passing the reins to Ewert will continue to be the company's spokesperson. (Photo by Vasna Wilson/Freelance) less

Portrait of Men's Wearhouse new CEO Douglas Ewert, left, and founder, chairman and former CEO George Zimmer at the San Francisco's downtown store on Market St. Zimmer who is passing the reins to Ewert will ... more

Photo: Vasna Wilson
WilsonManish Tandon, Freelance

It's guaranteed: Fire an icon and face furor

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When you fire the founder and face of a well-known company, people notice.

Fans of George Zimmer expressed disapproval on the Men's Wearhouse Facebook page. And employees at a Men's Wearhouse in Anchorage, Alaska, recently refused to sell merchandise in protest, according to a local TV station there, KTUU.

"We are avid supporters of George. We love him very much. He's been there for all of us," a store assistant manager said.

Since Men's Wearhouse fired Zimmer from his position of executive chairman on Friday, he and the company have engaged in a public back-and-forth.

On Tuesday, the company gave the first details on why it let him go.

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What they say

Commenters on Men's Wearhouse Facebook page sounded off on Zimmer's firing. A few examples:

Put your main man back and I may come back into your store."

Bring back George you corporate rats!

No Zimmer. No Peace."

Every time I read a post from Men's Wearhouse, I read it in George Zimmer's voice."

"Mr. Zimmer had difficulty accepting the fact that Men's Wearhouse is a public company with an independent board of directors and that he has not been the chief executive officer for two years," it stated. "He advocated for significant changes that would enable him to regain control."

Zimmer stepped down as CEO two years ago, and Doug Ewert took the leadership role.

Analysts differ on how the company is handling the ordeal.

One says Men's Wearhouse was right to fire Zimmer, who had not come to terms with his lesser role, and it has dealt with the issue responsibly; while another says it failed to take into account the degree to which consumers identify Zimmer with the brand.

"It's very risky to let the founder and face of a company go unless they have a careful transition in place," said David Johnson, CEO of Strategic Vision, an Atlanta-based public relations agency specializing in branding and crisis communication.

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"They waited too long and let Zimmer define the situation," he said. "They should have given their reasons for firing him sooner. Now he looks like the aggrieved party against a cold faceless corporation.

"People recognize Zimmer as the company almost," Johnson added.

Clean break needed

At this point, Men's Wearhouse should not engage in a "tit for tat" with Zimmer, Johnson said. It should make a clean break with a dramatic new marketing campaign to re-introduce the brand, which would include its plans to increase its emphasis on appealing to millennials - those who were born between 1980 and 2000, Johnson said.

He noted that it took companies such as Wendy's and KFC a few years to regroup after the death of their respective company faces, Dave Thomas and Harland Sanders.

Analyst Richard Jaffe at Stifel Nicolaus believes Men's Wearhouse acted reasonably and had no choice other than to fire Zimmer.

"We believe he had 'founder's regret' once he found himself no longer in the driver's seat and not in alignment with the board's decisions," Jaffe wrote in a note to investors Tuesday.

Zimmer and the board had two main areas of contention, Jaffe wrote: whether to pursue alternatives for the company's discount clothing chain K&G and possibly sell it off and the bigger issue of whether to take Men's Wearhouse private.

Reversal on K&G

Zimmer initially agreed with the board on exploring new options for K&G but reversed himself, according to Jaffe.

Zimmer also was pushing to sell the company to an investment group, an idea the board opposed, Jaffe wrote.

Jaffe stated that he agrees with the board that taking the company private, "especially at its current valuation, would be a poor decision for the business and likely put the franchise at risk by burdening it with debt."

On Monday, Zimmer resigned from the Men's Wearhouse board because he said the board refused to address his growing concerns about the company's direction. On Friday, he had made a similar statement about the board not listening to him.

Problems detailed

A Men's Wearhouse statement on Tuesday cited examples of problems between Zimmer and company leadership:

After selecting Ewert as CEO and picking other key executives, "Mr. Zimmer eventually refused to support the team unless they acquiesced to his demands," the company wrote. "Mr. Zimmer expected veto power over significant corporate decisions."

The company stated that it had made "considerable effort" to reach a solution that would have allowed Zimmer to have "significant involvement" in the company but he refused to accept anything other than "full control."

Zimmer's story is ingrained with the company's. In Houston in 1973, he opened his first Men's Wearhouse store on a shoestring, and as the company grew he became a household name from TV ads.

Men's Wearhouse has corporate offices in Houston and in Fremont, Calif., where Zimmer worked, and operates more than 1,100 Men's Wearhouse, Moores and K&G stores nationwide.

Shares of Men's Wearhouse closed Tuesday at $37.13, up $2 or 5.69 percent.